BRIEFING ON IL&FS

April 3, 2019

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Appointment of New Board
• GoI through MCA moved S/241 Application before NCLT, Mumbai against previous IL&FS Board on
October 1, 2018

• NCLT Order (1 Oct 2018) – affairs of IL&FS were being conducted in a manner ‘prejudicial to public
interest’. Previous Board suspended. New Board took charge on October 4, 2019

• The New Board (appointed pursuant to NCLT orders dated 1 Oct, 3 Oct and 21 Dec 2018)

Mr. Uday Kotak Chairman

Mr. Vineet Nayyar** Executive Vice Chairman
Mr. CS Rajan* Managing Director
Mr. Bijay Kumar Deputy Managing Director
Mr. GC Chaturvedi Non-Executive Director
Mr. Nand Kishore Non-Executive Director
Dr. Malini Shankar Non-Executive Director
Mr. N. Srinivasan Non-Executive Director

* Appointed as MD with effect from 3 April, 2019

** Redesignated with effect from 3 April, 2019
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IL&FS: An enormous financial challenge
• Large outstanding debt FB INR 94,216 Cr.1 Total FB + NFB INR 99,354 Cr2
• INR 48,470 Cr FB in 4 holding companies (ILFS, IFIN, IEDCL, ITNL)
• Creditors, both secured and unsecured present across levels
• High gearing which limits financial flexibility
• Consolidated debt : equity ratio of ~10 : 1 as on 31 Mar 2018
• Project cost over-runs funded through Group debt, on the back on uncertain claim realization
• Huge asset-liability mismatch, affecting servicing capability. Short term liabilities raised to fund long term
infra assets
• Investments (equity & debt) in SPVs made by borrowings at the HoldCo level
• Back ended cash-flows further subjected to lender controls (escrow) limiting upstreaming to HoldCos
• Model predicated on continuous need for refinancing
• Potential poor recovery of loans – made to internal and external parties
• Large portion of external lending to relatively weak clients
• Absence of a central control function

1 - As on 8 Oct 2018; 2 - As on 30 Sep 2018

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IL&FS Group: Total outstanding (FB & NFB)
Estimated Fund Based o/s as on 8 Oct, 2018
Estimated Non-Fund Based o/s as on 30 Sep, 2018

INR Cr

Fund Based O/s Principal (Aggregated*) 94,216

Secured 73,359

Unsecured 20,857

Non-Fund Based O/s 5,139

Bank Guarantees (BG) 4,853

Letters of Credit (LC) 286

Total Outstanding 99,354

*Includes FB Principal O/s aggregating INR 4,570 Cr.: (i) GIFT INR 1,233 Cr. (IL&FS Group
has 50% stake); (ii) ONGC Tripura Power INR 3,337 Cr. (IL&FS Group has 26% stake)

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Creditors present across levels
Creditors of the IL&FS Group at the different layers of entities of the IL&FS Group and by type

Entity Level Category of Creditor (Fund Based O/s) (as of October 8, 2018) (in INR Cr)
Type in IL&FS IL&FS Exposure IFIN Exposure to
PSU Fund Based
Other Fin.
Non-Foreign
Fund Group Corps. State Group
Group NCDs CP to NBFCs Others Total
Banks Banks Institn. Banks
Based (Fund Based) Govt.
(Fund Based)
34,326 19,247 6,025 7,779 3,923 - 1,081 53 - 925 73,359
At IL&FS 1,455 9,519 875 605 100 - - - - - 12,553
Secured

At other key
holding 8,771 2,391 2,909 760 1,668 - 242 13 - 872 17,626
companies
Operating
Level 24,101 7,337 2,241 6,414 2,155 - 839 40 - 53 43,180

1,056 6,520 3,411 1,359 2,108 3,028 626 1,050 602 1,097 20,857
At IL&FS - 7 2,000 814 260 1,932 - 487 - - 5,499
Unsecured

At other key
holding 649 3,566 321 - 243 298 65 - - 459 5,675
companies
Operating
Level 407 2,948 1,090 545 1,606 798 561 563 602 639 9,682

Total 35,382 25,767 9,436 9,138 6,031 3,028 1,708 1,103 602 2,022 94,216

Amongst the secured creditors, the nature and value of security available may vary from creditor to creditor
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High complexity with multiple business verticals

IL&FS (CIC)

Maritime & Real Transport- Waste

Education EPC Mgmt.
Ports Estate ation Others Total: 302*
(IETS) (IECCL) (IEISL)
(IMICL) (HCPL) (ITNL)
Foreign: 133
5 entities 1 entity 14 entities 1 entity 160 entities 9 entities 8 entities
Domestic: 169

Financial
Energy Project Devpt. Technology Urban
Services Water
(IEDCL) Advisory (ITL) Infra.
(IFIN & IIML)
35 entities 30 entities 17 entities 8 entities 7 entities 6 entities

* Post adjusting for closure of 45 entities (42 foreign and 3 domestic)

Needing time to comprehend, develop and implement resolution plans

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Compounded by a complex holding structure

Level from ILFS • Multiple business verticals

L0 = IL&FS # of
Nature of Entity L1 = One Level Entities • Multiple layers - up to 4 layers
Down
L2 = 2 Levels Down • Multiple structures - WOS, Subs with
Parent Holding counterparties (pvt and govt), Associates,
L0 1
Co. JVs
L1 9
Intermediate
L2 3 • Multiple geographies of operations – Asia,
Holding Co.
L3 2 Europe & North America, Africa
L1 31

Operating Level L2 120 • Varied interests of different stakeholders -

Co. L3 34 JV partners (Orix, PSUs, State Govts.),
L4 102 Public shareholders (IECCL, IIML, ITNL),
Total 302 Other minority partners

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Strategic & Operational Actions

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 Strategic actions
• Appointing Advisors - Legal, Transaction & Resolution Advisors

• Securing a moratorium order from third party actions to create ‘calm period’
• to enable development of orderly resolution plans
• to protect creditor interest across entities and creditor classes
• to prioritize use of cash-flows for maintaining ‘going-concern’ status

• Setting up ‘Operating Committee’ of senior executives under VC&MD for managing daily operations,
co-ordinating with various agencies, for organisational stability

• Developing a resolution framework for managing unprecedented group insolvency using an

umbrella resolution approach, built on principles analogous to IBC, to protect stakeholder interests
• Resolution plan for international entities
• Assessment of resolution options. Kick starting and monitoring the Asset Monetisation process
• Asset Monetisation process subject to NCLT approval and supervision of Justice (Retd.) DK Jain

• Active recovery actions on external lending portfolio of IL&FS Financial Services (IFIN)
• Working with central and state government authorities to resolve outstanding claims

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Asset Monetisation: Transactions in progress
Securities Domestic Alternate
Business Renewable Roads Investment Education Thermal
Details
(ISSL + Energy Vertical Fund Mgmt. (IETS) (ITPCL)
ISTSL) (ITNL) (IIML)
Shortlisting of Completed Completed Completed Completed Completed Completed
Eligible EOIs (28 Nov) (14 Dec) (15 Jan) (11 Jan) (18 Jan) (26 Feb)

Planned binding Completed

TBD May Apr Apr May
bids1 (18 Mar)
# of Entities
(part of the launched 2 11 21 10 4 7
Asset Sales)
FB Debt of assets
launched (Ext. + ~220 ~4,300 ~26,000 - ~1,050 ~7,800
Grp.) (INR Cr)2
Other launched processes (all international) – IPTF Fujairah, Parkline Dubai, IIPL USA
Further processes under discussion - OTPC, Paradip Refinery Water, ILFS Tech, LARES Philippines, ILFS Envt.,
Mangalore SEZ, Chonqing Yuhe Expressway, GIFTCL, Tamil Nadu Water & New Tirupur, CPG BPO

Resolution process and asset monetisation is subject to approval of NCLAT/NCLT

1 - Indicative timelines; 2 - Current estimates Back

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IFIN: Recovery overview
Category INR Cr As on Mar 31, 2019 INR Cr
( Estimates)
Assets Resolutions/Recovery 697
External Exposure
Sale / Redemptions of Investments 235
Credit 8,369
Total Inflows : Oct’18 – Mar’19 931
Investments 2,287
Net Closing Balance on Mar 31, 2019 1,010 Sub Total (A) 10,656
Group Exposure
Credit 5,364
Summary of legal proceedings – As on Feb 28, 2019 Investments 1,485
Borrower No of Petiton / Sub Total (B) 6,849
Category of Legal Actions Groups Complaints
Other Current Assets ( C) 1,300
Section 138 Complaints 14 41
Recovery suits (including Summary) 10 18 Grand Total (A + B +C) 18,805
NCLT Action 8 12
GNPA %
Mortgage Enforcement 1 2
SARFAESI Action 5 14 Dec 2018 ( unaudited) ~90.0%
Sep 2018 ( unaudited) ~61.8%
Mar 2018 ( Audited) ~5.3%

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 Operational actions
• Addressing ongoing operational challenges – securing release of O&M payments, termination notices
from authorities, coercive action from international creditors, litigations, renewing critical bank
guarantees
• Development of a liquidity management framework using a 12 month cash flow based solvency test
• Classifying 169 domestic entities of the group into ‘Green’, ‘Amber’ and ‘Red’ categories
• Month-on-month budgeting and review of liquidity position for 75 material entities
• Driving cost optimization and receivables collection initiatives
• 28% reduction in total opex monthly run-rate between Oct’18 and Mar’19
• Annual impact of over INR 300 Cr basis run-rate reduction
• All contracts assessed for viability. Unviable contracts foreclosed
• Initiatives to clear back-log on salaries
• Resolving crisis involving ILFS Group employees
• Secured release and safe return of employees held hostage in Ethiopia
• Monetisation of non-core assets – Luxury cars, immovable properties underway

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Domestic entities: Green, Amber, Red categorisation
• Categorization based on cash-flow solvency test was carried out to determine course of action
i.e. managing liquidity, implementing payment protocol etc. until resolution is implemented
• 157 (out of 169) Domestic IL&FS entities have been categorized in 3 categories viz. “Green”,
“Amber” & “Red”
Summary – Entity categorization based on 12 month cash flow solvency test
# of # of Entities with External FB Debt
Category
Entities External Debt (INR Cr)
Green 54 19 10,472 (12%)
Amber 13 13 16,372 (18%)
Red 82 33 61,375 (69%)
Under Liquidation /CIRP/ Striking Off 8 1 6 (0.007%)
Entities Categorized (A) 157 66 88,225 (99%)
Entities with <=50% IL&FS holding
12 3 1,021 (1%)
(Not Categorized) (B)
Subtotal (C = A+B) 169 69 89,246 (100.0%)
International Entities (Excluded by
133 7 4,969
NCLAT from moratorium) (D)
Total (E = C+D) 302 76 94,215
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Liquidity management
• Monthly budgeting and review meetings: 75 entities have been identified and prioritized
basis nature and size of operations

• Objective: Ensuring operational continuity without any additional cash infusion

• Reviewing actual cash flows (collections, payroll, contractors, statutory, admin etc.)
for the previous month to highlight budget vs. actual variances
• Understanding and reviewing operational challenges being faced by the company,
and escalating the same
• Discussing forecast of collections and payments for the coming month and
developing an estimate of the same for future periods
• Identifying avenues for liquidity generation in entities with cash shortfall, and driving
these initiatives with key management personnel

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THANK YOU

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